I must say this has been an interesting thread...
Most pertinent points have been addressed.
Yes, PAPERSPACE was originally developed primarily to help the mechanical ACAD world show different views of the same model. It certainly has additional value today, but the questions of what is "the better" or "best" way to utilize it are very subjective.
I too have been an ACAD guy since 1986, v2.18., and have embraced and written tools using LISP and SCRIPTing since about 1987. I've seen all the methods discussed here, but of course still like what I'm used to the best, and I've done it both ways many, many times.
I think of it thus:
Models ALWAYS go in MODELSPACE, drawn at FULL SCALE.
Borders, annotations and even DIMENSIONS should go in PAPERSPACE, (but there are good reasons NOT to do this as well, particularly if you don't lock your VIEWPORT's zoom factor in paperspace, using MVIEW - LOCK - ON.)
All DIMENSION features scaling should be controlled using DIMSCALE. (You may have noticed that balloon scale is linked to DIMSCALE.) In other words, set your dimension variables up for a 1=1 scale, and use DIMSCALE when you need them changed.
IF you use DIMSCALE, it is relatively easy to write routines that handle the scaling of your border block, dimensions & text sizes, or if you prefer, your VIEWPORT's zoom factor.
Where I work currently, our border is in PAPERSPACE at 1=1 scale, and we draw a rectangle in MODELSPACE that represents the available drawing area. Schematics are always drawn at our 1=1 standards within this area, and the VIEWPORT cut in PAPERSPACE matches the size of that rectangle. When we need a scaled drawing, we scale the rectangle in MODELSPACE, then unlock the PAPERSPACE VIEWPORT, perform a ZOOM EXTENTS, then another ZOOM (window) to match the corners of the rectangle and the VIEWPORT.
This is different from what I prefer, because coming from the OLD world ACAD, we always scaled the border up to fit the model, and kept track of the scale factor in the DIMSCALE setting. This worked well for me in the past scaling the border in PAPERSPACE just like I used to when it was in MODELSPACE, but then all our plotting was done through SCRIPTS that identified a plot window based on the titleblock name and the DIMSCALE. I must admit plotting is much simpler where I am now though, because we plot Extents to Fit on B-size. That works well here, but in the past I had so much trouble with people accidentally putting entities off in space, or somewhere outside the border area, that plotting Extents used to be problematic - that's how I at one time standardized on plotting Window, and tracking window points for multiple border blocks in a text database.
Anyway, gotta love a program that can be customized for YOUR company's preferences, and which way is best is in the eye of the technician using the program. The best way is generally the simplest and most efficient way, whatever that happens to be for you.